Draw the graph · Macro · Loanable funds market

Households save more

Ddemand for loanable funds

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Ssupply of loanable funds

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Drag a curve sideways, or use its arrows. A curve you do not move is a curve you are saying stays put. Make each shift clear enough that a reader could see it.

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Demand for loanable funds stays put. Supply of loanable funds shifts right.

Saving is the supply of loanable funds. When households save more at every real interest rate, supply shifts right. The demand for funds is unchanged. The lower interest rate moves borrowers down along their demand curve, and more projects get funded.

The real interest rate falls and more funds are borrowed.

Common mistake. Some students shift demand right because 'more money is available to borrow.' More available funds is the definition of a supply shift. Demand is what borrowers want.

More loanable funds market prompts

The government runs a deficit An investment tax credit Foreign savers lend here The government runs a surplus Firms turn pessimistic A consumption boom cuts saving

Go deeper

Lesson: Limits of Fiscal Policy

Every prompt here is one shift. The course chains them: a lesson on why the curve moves, a graded drawing, and spaced review that brings back the shifts you get wrong.

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